Republican Presidential candidate Mitt Romney, the former Governor of Massachusetts, believes that America must aggressively pursue trade agreements with other countries.
He recently traveled to South Carolina to outline his trade program: Romney Agenda: A New Vision To Open Markets And Help U.S. Workers To Succeed. Key points:
- Protectionism hurts - and will hurt Iowa's manufacturers and farmers. He spends considerable time describing the importance of foreign markets to Iowa. He notes that other nations are pursuing FTAs and that many don't include the U.S., implicitly saying we will be outcompeted in those markets if we don't get a move on. Job growth depends on reaching foreign customers.
- Four part vision: (1) Presidential authority to open markets; (2) train, assist and empower U.S. workers; (3) promote a level playing field; (4) build a Reagan zone of economic freedom.
- The President needs trade promotion authority from Congress.
- He wants to improve manpower development programs, auditing existing programs for effectiveness, and developing one-stop shops (presumably for various types of assistance for displaced workers). He wants to create self-managed worker training accounts.
- He wants to create a level playing field: enforcing the provisions in agreements, fighting currency manipulation, protecting intellectual property rights, fighting (foreign) protectionist product standards, while protecting U.S. consumer health and safety.
- He wants to pursue more trade negotiations, including completing the Doha Round, but sees difficulties in the WTO (too many members for negotiations to succeed) and in bilateral negotiations (the spaghetti bowl). He'd like to begin merging and coordinating bilateral agreements - aligning them on each other - to create an enormous free trade agreement. Comments indicate that he doesn't intend this to be complementary to the WTO.
A little more on this merger:
We need bold ideas to address the new global economy. Starting with a core of U.S. free trade agreement partners, Governor Romney would seek to bring together nations committed to open markets and playing by the rules in the largest ever Free Trade Area, and go beyond traditional trade to promote high standards in areas critical to U.S. competitiveness. The Reagan Zone Of Economic Freedom would act as an alliance working together internally, in the World Trade organization and elsewhere to push reforms and work cooperatively in areas like labor and the environment. Governor Romney would seek to expand these efforts to include the European Union and other nations that agree to meet these standards, while challenging China and others advancing agreements that exclude America.
Here's some additional detail on the self-managed worker training accounts:
These self-managed accounts will give workers the opportunity to take control of their own futures by getting the training and education they need to succeed in the new economy. The accounts may be used for a broad variety of different training and educational opportunities, including those provided by community colleges or businesses that hire these workers. Best of all, these accounts will take money out of the hands of bureaucrats and put it into the hands of those who really need it – displaced workers.
Last February Romney talked to the Detroit Economic Club about what he thought it would take to grow the U.S. economy: Governor Mitt Romney's Remarks At The Detroit Economic Club (transcript, February 7, 2007). Much of this doesn't deal explicitly with trade; I'll just touch on one issue - savings:
Low personal savings rates in the U.S. are associated with demand for foreign investment; foreign investment flows are tied to the trade deficit, and the deficit reduces domestic political support for a liberal trading regime. Now Romney doesn't make those points in his speech, but he does talk about steps he'd like to take to encourage additional personal saving:
...I believe people should be allowed to earn interest dividends and capital gains, up to a certain amount per year, tax-free and without restrictions on how or when their savings or investments are spent. As an example, let's take the number of 5,000 bucks. Let's say, and that's not a final number, but let's use 5,000 dollars as an example for joint filers….
The Federal budget deficit also contributes to low U.S. savings. Romney doesn't discuss this, but he does talk about taxes and spending. He wants to make the Bush tax cuts permanent. This would help to reduce the deficit or increase U.S. savings. He's all in favor of holding down spending, of course, but doesn't bite the bullet except in the most general terms. He'd like to see Congress restrain itself to budget targets, or failing that, for the President to get the line-item veto, he'd like more efficiency in government, and he wants to address Social Security, Medicare, and Medicaid spending. It's hard to see a credible commitment here yet to addressing the budget deficit.